My introduction:
To understand the crisis of the National Health Service, the bad handling of the pandemic*, stagnant economy, weak productivity, a state struggling to invest adequately in the green economy, inability to build enough and affordable houses, expensive rent, decades of poor investment in infrastructure by OECD measures, consumption, and consumerism, driven by debt, Labour/Conservatives capitalist values, one has to look at the economic model of the British economy. In reviewing Brett Christophers’s work, Cédric Durant has provided a good overview of such an economic model of accumulation and its ramifications as well as some criticism of Christophers’s take on capitalism in general and what might replace it.
———
*I doubt it that the recently publish report will ever mention the economic model pursued by Britain for more than four decades and how it played a major role in the infrastructure of health and the well-being of the Brits.
*****
Few today will need convincing that the neoliberal offensive, launched in the late 1970s to resolve a global profitability crisis and beat back an insurgent labour movement, has resulted in surging inequality, declining real wages, soaring asset prices, financial instability and ecological devastation.
Britain has been reshaped by the monopolization of other scarce resources. The scope of subsequent works was broader, though still largely confined to the Western world.
Brett Christophers’s work represents an impressive attempt to dissect the capitalist beast and understand its inner workings.
His criticisms of each sector of the rentier economy—land, finance, infrastructure, platforms, public services, outsourcing, utilities—are trenchant enough in themselves; together they add up to a comprehensive indictment of the current mode of accumulation. They call into question the more fundamental institutions of private ownership and market coordination.
Following David Harvey’s ‘advice’ that ‘until capitalism has been demystified it cannot be supplanted’, and that the best means to do so is to interrogate its spatial and temporal dimensions.
Since Thatcher’s election in 1979, two million hectares of British land—10 per cent of the country’s total surface area—has been sold off by public entities, in what amounts to the largest privatization in national history.
Assets have often been sold at bargain rates, depriving public bodies of vital income and constraining their capacity to invest. Their new owners have meanwhile made handsome returns. Real estate is now twice as large as any other sector, making it the UK’s primary source of economic growth, and property wealth has soared to some £8.1 trillion. Meanwhile, the poorest section of the population has seen the cost of rent as a share of income increase dramatically, from around 25 per cent in 1985 to nearly 45 per cent in 2015. More than 40 per cent of all council flats sold under Right to Buy in England are now rented privately.
Naked plunder is not a marginal feature of the contemporary economic order. It is ‘at the very forefront of modern capitalist accumulation and growth’. ‘Financialization, market rule, economization and entrenched class power’ have been variously identified as defining features of neoliberalism. But, for Christophers, its essential characteristic is the ‘assault on state ownership’, which transforms even the ground beneath our feet into an object of exchange.
Christophers defines rent as ‘income derived from the ownership, possession or control of scarce assets under conditions of limited or no competition’. He goes on to describe how this model of profit-seeking operates across six pivotal sectors of the uk economy: land, finance, natural resources, intellectual property, digital platforms and the outsourcing industry.
Christophers cites the Nairn–Anderson theses to argue that Britain is a rentier state ‘by historical disposition’, dominated by landowners and financiers since the eighteenth century.
Since the 1980s onwards, and after the end of temporary social-democratic settlement of the post-war era, ‘rentierism’ has been reimposed on every major area of economic activity, from the remnants of heavy industry to the expanding service sector.
Though the neoliberal period is typically understood in terms of ‘financialization’, Christophers rejects this rubric, which ‘privileges one strand of a broader structural transformation and ignores all of the others.
‘If rent is capital’s logical destination’, writes Christophers, ‘social and economic devastation may in turn be rent’s logical destination.
It is the asset manager that decides how the asset is commercially exploited: who electricity is sold to, whether road tolls should be increased, how farmland should be tenanted.’ In operating such assets, ‘asset manag- ers increasingly take on the role of quasi-governments (albeit unelected ones)’.
Everything from the apartment you rent to the electricity you use to the bus you ride is affected by the commercial dictates of firms such as Blackstone, Macquarie or Brookfield. Of the $100 trillion pension- and insurance-fund ‘assets under management’ by this sector, four-fifths are invested in stocks and shares by the ‘Big Three’, BlackRock, Vanguard and State Street.
Asset Manager funds operate: maximizing revenues, minimizing operating costs and avoiding capital expenditure. The result is uneven distribution of returns: on the one hand, the generalized degradation of living standards for ordinary people—crumbling houses, polluted water, rising food, energy and transport prices; on the other, super-profits for fund managers.
A constant feature of Christophers’s work is the attempt to show that capitalism is driven by profits rather than efficiency, and that whenever they come into conflict the first will win out.
When it comes to green electricity, profitability is elusive. Production and distribution on the fragmented neoliberal market is a complex process that demands significant upfront investment, which may not be recovered for years to come. Being relatively young, with low barriers to entry, the green-energy industry is subject to heightened competition, which depresses profit margins further.
This explains why major oil companies, disappointed by the returns from green investments, are planning to expand their capacity for fossil fuel extraction.
One of Christophers’s conclusions: ‘the private sector needs to be stripped of responsibility for renewable energy generation’, which can’t be counted on being profitable enough for the private sector to develop it ‘as urgently and massively as we need.’
And immanent critique of neoliberal reforms is robust: challenging the mainstream on its own terms, refusing to succumb to left melancholia or defeatism, and registering the need to adumbrate an alternative political economy. But what might the latter entail? First of all, it would mean moving beyond Christophers’s discussion of nationalization to consider the deeper dynamics of structural transformation. The extent to which Christophers’s argument supports a programme of systemic change, as opposed to state ownership and an improvement of market mechanisms, is somewhat unclear. His research could be read—and probably is, by many financial journalists and analysts—as a clear-eyed exposition of market failures rather than an indictment of markets themselves.
We can observe the same political deficit in Rentier Capitalism, where Christophers frames rentierism as the outcome of piecemeal policy changes rather than a political-ideological onslaught.
If, as Christophers writes, asset managers have spent decades developing the ability to control the infrastructure they own, it poses the intriguing question of how such control could be transferred to democratic actors. What kind of managerial tools are needed to exercise it? How much do these tools, in their present form, advance what Bettelheim called the socialization of possession: ‘the ability to put the means of production into operation’ These issues are raised but not addressed by Christophers, whose gran- ular focus on the present economic conjuncture can sometimes eclipse its future possibilities.
Christophers’s work suffers from a certain myopia in that it shrinks from viewing the economy as a calculable totality.
Rather than evaluating the overall effects of green subsidies, he confines himself to sectoral economic analysis.
Today’s capitalists are often uninterested in the productive valorization of their assets. One way or another, their economic position shields them from competition and allows them to extract maximal income while making minimal investments.
As Harvey has shown, crises tend to occur when financial speculation has become perilously untethered from the real economy. When tensions in the valorization landscape are released, this generates socio-economic and geo-political shockwaves that devalorize capital and redistribute value among social groups and geographical spaces.
The underlying conditions persist, periodically erupting in new forms, whether in monetary instability, growing geopolitical rivalry or disorder in the financial system itself.
Assuming that an eco-socialist alternative remains out of reach, there are at least two possible outcomes to consider. The first is that rentierism will be displaced by a new form of capitalism which is more competitive and state-directed—capable of dynamizing the accumulation of productive capital and realigning financial claims to allow for their effective valorization. Under the whip of external com- petition, notably the rise of China, Western powers may adopt a more aggressive industrial policy in an attempt to maintain their positions in the world system. The second possibility is that rentier and monopoly interests will continue to preside over an increasingly unequal, authoritarian and stagnant society, whose political structures will slowly mutate into some institutionalized oligarchic form.
****
My comment:
Durant’s review suffers from a major lacuna he touched upon without integrating it in his approach: How the balance of class relations and class conflict since the 1980s played in favour of the capitalist class as a whole, how UK’s finance is entangled with the Gulf finance and the hydrocarbon dollar and how this circuit of finance capital lubricates politics and shapes liberal imperialist adventures and domination.
The review is Western-centric and touches only in passing on what Our Lives in Their Portfolios – this capitalist model – means for the ‘Global South’. Britain here is not looked at as an imperialist state with finance as one of the fundamental pillars of its geopolitics. Is the naked plunder at home separate from the naked plunder abroad or do they form a totality?
Comments